Download Lessons from Chapter 7

Lessons from Chapter 7
Product strategy:

lies at the heart of every organization in that it defines what the organization does and
why it exists.

involves creating a product offering that is a bundle of physical (tangible), service
(intangible), and symbolic (perceptual) attributes designed to satisfy customers' needs
and wants.

typically strives to overcome commoditization by differentiating product offerings via
the service and symbolic elements of the offering.
The product portfolio:

is used in both consumer (convenience, shopping, specialty, and unsought products) and
business (raw materials, component parts, process materials, MRO supplies, accessory
equipment, installations, and business services) markets.

is used in most firms due to the advantages of selling a variety of products rather than a
single product.

consists of a group of closely related product items (product lines) and the total group of
products offered by the firm (product mix).

involves strategic decisions such as the number of product lines to offer (variety), as
well as the depth of each product line (assortment).

can create a number of important benefits for firms, including economies of scale,
package uniformity, standardization, sales and distribution efficiency, and equivalent
quality beliefs.
The challenges of service products:

stem mainly from the fact that services are intangible. Other challenging characteristics
of services include simultaneous production and consumption, perishability,
heterogeneity, and client-based relationships.

include the following issues:

service firms experience problems in balancing supply (capacity) with demand.

service demand is time-and-place dependent because customers or their
possessions must be present for delivery.

customers have a difficult time evaluating the quality of a service before it is
purchased and consumed.

service quality is often inconsistent and very difficult to standardize across many
customers.

the need for some services is not always apparent to customers. Consequently,
service marketers often have trouble tying their offerings directly to customers’
needs.
New product development:

is a vital part of a firm's efforts to sustain growth and profits.

considers six strategic options related to the newness of products:

New-to-the-world products (discontinuous innovations)—involve a pioneering
effort by a firm that leads to the creation of an entirely new market.

New product lines—represent new offerings by the firm, but they become
introduced into established markets.

Product line extensions—supplement an existing product line with new styles,
models, features, or flavors.

Improvements or revisions of existing products—offer customers improved
performance or greater perceived value.

Repositioning—involves targeting existing products at new markets or
segments.

Cost reductions—involves modifying products to offer performance similar to
competing products at a lower price.

depends on the ability of the firm to create a differential advantage for the new product.

typically proceeds through five stages: idea generation, screening and evaluation,
development, test marketing, and commercialization.
Branding strategy:

involves selecting the right combination of name, symbol, term, or design that identifies
a specific product.

has two parts: the brand name (words, letters, and numbers) and the brand mark
(symbols, figures, or a design).

is not only critical to product identification; but also the key factor used by marketers to
differentiate a product from its competition.

to be truly successful, should develop a brand that succinctly captures the product
offering in a way that answers a question in the customer’s mind.

has many advantages, including making it easier for customers to find and buy
products.

involves having a solid understanding of four key issues:

manufacturer versus private-label brands—private-label brands are more
profitable than manufacturer brands for the retailers that carry them. However,
manufacturer brands have built-in demand, recognition, and product loyalty.

brand loyalty—a positive attitude toward a brand that causes customers to have
a consistent preference for that brand over all other competing brands in a
product category. Three levels of loyalty include brand recognition, brand
preference, and brand insistence.

brand equity—the value of a brand or the marketing and financial value
associated with a brand's position in the marketplace.

brand alliances—branding strategies, such as cobranding or brand licensing, that
involve developing close relationships with other firms.

also involves taking steps to protect brand names and brand marks from trademark
infringement by other firms.
Packaging and labeling:

are important considerations in branding strategy because packaging often goes handin-hand in developing a product, its benefits, its differentiation, and its image.

includes issues such as color, shape, size, and convenience of the package or the
product's container.

are often used in product modifications or cobranding to reposition the product or give
it new and improved features.

are vital in helping customers make proper product selections.

can have important environmental and legal consequences.
Differentiation and positioning:

involves creating differences in the firm’s product offering that set it apart from
competing offerings (product differentiation), as well as the development and
maintenance of a relative position for a product in the minds of the target market (product
positioning).

can be monitored through the use of perceptual mapping—a visual, spatial display of
customer perceptions on two or more key dimensions.

is fundamentally based on the brand, but is often based on product descriptors, customer
support services, and image.

includes the positioning strategies of strengthen the current position, repositioning, or
reposition the competition.
Managing products and brands over time:

can be addressed via the traditional product life cycle, which traces the evolution of a
product's development and birth, growth and maturity, and decline and death over five
stages:

development—a time of no sales revenue, negative cash flow, and high risk

introduction—a time of rising customer awareness, extensive marketing
expenditures, and rapidly increasing sales revenue

growth—a time of rapidly increasing sales revenue, rising profits, market
expansion, and increasing numbers of competitors

maturity—a time of sales and profit plateaus, a shift from customer acquisition
to customer retention, and strategies aimed at holding or stealing market share

decline—a time of persistent sales and profit decreases, attempts to postpone the
decline, or strategies aimed at harvesting or divesting the product

can be influenced by shifts in the market, or by the actions of the firms within the
industry as they constantly reinvent themselves.